Prices going up is usually a bad thing. If food, rents and energy prices go up too much living standards fall and people on lower incomes are particularly badly affected as they spend a big proportion of their incomes on basics.Better off people are made to spend very big proportions of their income on a…
Prices going up is usually a bad thing. If food, rents and energy prices go up too much living standards fall and people on lower incomes are particularly badly affected as they spend a big proportion of their incomes on basics.Better off people are made to spend very big proportions of their income on a wide array of taxes. When they go up people rein in spending or leave the country.
Governments facing an inflation often intervene to control prices. They offer to stop rents or food prices or energy going up. This is popular when they start to do it, holding out hope of relief from ever rising and increasingly unaffordable bills. It becomes unpopular when people find out it cannot work in the longer term, as it stifles supply and investment in more capacity. It will lead to higher prices as we see in UK energy.
The current government presided over a near doubling of inflation in its first 16 months. It has increased the number of areas subject to price control and has exercised existing powers to control prices.
Despite or because of price controls energy has got dearer, with increases in managed prices. The government’s big interventions in favour of more renewables has hiked energy costs.
Rail fares have gone up, with a large government pay settlement for train drivers adding to cost pressures.
Water bills have shot up with government deciding to require or allow the industry to invest much more in new pipes and water works.They need to catch up with the big increase in population brought about by government migration policy.
Food bills have gone up,with domestic farmers growing less thanks to higher taxes and withdrawal of subsidies.
Rents have shot up thanks to extensive new controls and taxes on landlords. Many smaller landlords are exiting the market. Government contractors have been bidding up rents to give priority to recently arrived migrants.
Wherever price controls have been tried it leads to less supply. To get prices under control you need more supply. Dear energy created by overriding markets is now leading to many industrial closures, driving home supply down further and adding to inflationary pressures.
